00:00I think the last time we spoke a few months ago there was a lot of talk about whether we would actually see a meaningful rebound in small and mid cap shares that since we last spoken the Russell 2000 is finally a set a fresh record higher seeing a lot more interest now. And I guess what would consider to be value particularly in a market that most people consider to be overvalued. Are you finding opportunity right now to buy. We are. We're still finding ideas in the small value space.
00:29You know they really have been ignored. They're kind of the ugly ducklings when you compare it to Nvidia and Apple and all these giant exciting growth stories. You know the little mundane businesses that we've invested in for 42 years just being seem particularly orphaned these days. So we're seeing great ideas and excited to be doing the research and think there's real opportunity for small value.
00:53Do you see a broader future for investment in that sort of entertainment space. And I guess it's more given what the sphere and MSG do. It's a little bit more of a hybrid entertainment space. But I am curious as to what additional value you find there.
01:07Well everywhere we go we know we talk to as many experts as we can as part of our regular research and due diligence. And everyone is saying you know post covid it's really a sticking that the next generation of citizens here particularly in America love experiences.
01:23They want to go out and be together to watch a ball game watch a movie go to a concert go to an outdoor stadium to see music. It's something that is really I think here to stay. The momentum is continuing to hold.
01:38And so places like the sphere that has this you know magical IP people want to come and experience it together. And I think it's really special. I think the Wizard of Oz is just you know scratching the surface. It's absolutely amazing and exciting to go to. But there will be other exciting amazing things. Everyone speculates well maybe one day you know it could be Star Wars. Maybe it could be Harry Potter. You never know what could be next. But those are the kind of things that people want to come in and appreciate in a live audience.
02:08You're you're no stranger to investing in the entertainment space. And at least prior to the tie up with Paramount Skydance you were one of the largest shareholders in Paramount. Now that that deal is done. Now that David Ellison has laid out his vision for what he wants to do with that company.
02:25I am curious as to whether you think that it can be not just profitable but also a growth story again.
02:32Well that's still an open question. You know it's been a torturous experience. I still think for sure there's a lot of value there. You know Paramount Studio is valuable. CBS is valuable.
02:44They're you know still number one year after year with their content. You look at all the different things of course Paramount Plus and Pluto. They have these extraordinary assets.
02:54And so the stock I think is still you know significantly undervalued. Now whether they can get the growth they hope to your question. That's and that's still an open question. Because you're you know you're competing with Netflix. You're competing with all the big guys.
03:07Apple and Amazon etc. And whether you can grow in that environment is something that's really a still an open question. I think Mr. Ellison has the right idea of you know building scale.
03:20You know building IP making these acquisitions that can really add value and hopefully potentially add significant growth from revenue and profitability.
03:29To that point on scale does a deal like one for Warner Brothers Discovery should that actually come to fruition. Does that seem smart to you.
03:37in terms of the cost and what it would actually bring to Paramount. Well I've been reading an awful lot about it and talking again to as many experts as possible.
03:47I think that acquisition makes a lot of sense. It brings scale as you suggest. It'll make them one of the major players that will be there forever.
03:56And at the same time there's huge synergies. You know huge cost cuts that are available. You have two major studios.
04:02Maybe you could sell one of the studios and studio a lot. And all the real estate value that's there. But also just again extraordinary amount of synergies that are there.
04:12Extraordinary amount of cost cutting that's there. And we put it all together. I think there's this real potential of a merger like that would happen.
04:21I do just have to ask you just about the political climate because that's sort of driving some of those divisions these days.
04:27And I know in the past you've said that you're still hopeful for America still hopeful for our economy and our and our markets.
04:34But when you look at what's going on particularly in the city where you sit where Ariel sits in Chicago which has been the subject of some of the ire out of the White House.
04:44What do you make of it. I just think it doesn't make any sense at all.
04:49You know the city has never been more beautiful. It's never been you know the safety issues are drifting away. The violence is going down.
04:59You know we've had extraordinary leaders here who've worked to build our city back from times where it was somewhat troubled.
05:06But we know Mayor Johnson's done a great job. J.B. Pritzker's done a great job.
05:10You know former secretary of education Arne Duncan with his cred program the anti-violence initiative have made a major difference.
05:17And our in our business community our civic committee headed up by Derek Douglas.
05:22Everyone's come together and we're fully on on on online together.
05:28We have the same perspective that our city is really on the way back. Things are great.
05:32We got additional headlines out of the White House with regards to tariffs potentially more tariffs on China largely because the president
05:40says that he doesn't think Xi Jinping is cooperating enough in the negotiations being a small and mid cap investor particularly with some
05:48names that I would assume would have tariff exposure like Mattel. Does it give you a little bit of concern that we still have not
05:54sort of I guess reach some sort of resolution on where we're actually going with these tariffs what they will be and what we can count on
06:02them to be. Well none of us that are working the markets day to day like to see the volume. We don't like to see the
06:08volatility. We don't like to see the surprises. You know we're looking for stability and this is kind of a fragile atmosphere with
06:17whatever is going on around the world. All the challenges we face having these challenges domestically around the tariffs is
06:24something I think is really problematic. We've also seen a revival in deal making John that we didn't necessarily see definitely coming out of
06:32last year and at the start of this year. You are Ariel and your funds are investors and names like Carlisle Lazard and a few others. I am
06:41curious as to whether you think the current uptick that we've seen in deal making is actually going to continue and even
06:46potentially expand. I think it will continue and I think it will expand as we've had a chance to talk to the management teams at both Carlisle
06:56and Lazard. You feel like the momentum is building. This regulatory environment is so much more friendlier for acquisitions and mergers. I was
07:05talking to a great leader yesterday of a big brokerage firm and they were just saying how this is going to be a great time for more and more
07:15deals to happen. I just can't overemphasize that when you see the opportunities both for companies to make strategic acquisitions that it's not going to be
07:24questioned by the Justice Department or the SEC or the other regulators are out there. The FTC and the rest. I think you're just going to see one deal after
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